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Credit Suisse Risks Third Straight Loss

Credit Suisse Group AG is at risk of posting a third consecutive annual loss after predicting it will take a 2.3 billion-francs ($2.33 billion) hit from a US tax overhaul signed into law by President Donald Trump.

Unless the Zurich-based bank made significantly more than one billion francs in the final quarter of this year, the writedown could trigger yet another yearly deficit for the lender, which had a net income position of 1.14 billion francs after nine months, Bloomberg reported.

The new tax bill means both “Credit Suisse and UBS will have to book a loss,” Andreas Brun, an analyst at Mirabaud, said by phone. “It won’t affect Credit Suisse’s share price since they’ve guided for it and the writedown doesn’t affect the regulatory capital,” Brun said.

Credit Suisse has sought to reassure investors by saying that the policy for returning capital to shareholders remains unchanged and that the one-time accounting adjustment will have a “minimal” effect on the capital position.

The new tax on services and interest payments to affiliates outside the US is “likely to have a negative impact” on tax liabilities in 2018, Credit Suisse said. The bank will provide a more detailed account on the US tax reform’s impact with the release of its full-year results scheduled for Feb. 14.

The lowering of the corporate tax rate from 35% to 21% will benefit most companies but it also requires them to recalculate deferred tax assets that have accumulated on their balance sheets. Bank of America Corp. will also take a $3 billion charge and biotechnology company Amgen Inc. announced a writedown of $6 billion to $6.5 billion.